Art of the Deal

One recent example of industrial growth illustrates how economic development occurs at the regional level

Story by Rick Berg

Belmark’s decision to expand its labeling and packaging operations in northeast Wisconsin instead of elsewhere in the state or even outside Wisconsin required a year-long “intricate dance” involving multiple partners. At the heart of the process was trust, confidentiality and communication – a combination that landed Belmark’s new manufacturing facility in Shawano, as well as a separate significant expansion in De Pere.

In July 2015, Jerry Murphy and his staff at New North Inc. received a typically cryptic inquiry from a site selection consultant indicating an anonymous company was seeking a location for a new manufacturing facility. The inquiry originated in state with the Wisconsin Economic Development Corp. in Madison, and was forwarded along to New North. Northeast Wisconsin was among several regions under consideration, along with an unknown number of sites in at least six other states.

The anonymity of the prospect was not surprising. That’s standard procedure in most site selection processes. Also standard was a list of site criteria the client company required. New North’s role was then to evaluate those criteria and ask local communities within the region to respond with those items they had available.

“At that point, the consultant and his client don’t want to be dealing with 50 sites in 10 communities,” said Murphy, executive director of the regional economic development organization. “New North’s role is to gather information from the communities in our region – those that are likely to have a viable response – and screen those responses against the qualifications and criteria the consultant and client provided.”

Some of the criteria are typically specific and easy to identify – especially those dealing with real estate parameters and local infrastructure. Other criteria are more nuanced, such as community culture and lifestyle.

The key component, Murphy said, is the trust factor – that the consultant and his client have confidence that New North has done a good job providing viable prospects.

Trust and confidentiality

On the other side of the table sit the economic development professionals in multiple communities who are being asked to devote substantial time preparing a response, without knowing who the prospective company is or what kind of economic impact the company might have. For them, also, trust is also a key factor – trust that Murphy and New North are confident in the value of the prospect – usually based on nothing more than the reputation of the site selection consultant.

In this case, the consultant was Mike Mullis of Memphis, Tenn.-based J.M. Mullis Inc., a 30-year veteran in the business and someone who had worked with WEDC and New North in the past.

“It can be challenging when the prospect is anonymous, because you’re swinging at a ball they tell you is there, but you can’t see it. Early on, we really had to rely a great deal on the representations made by Mike Mullis, because we had nothing else to go on,” said Brian Knapp, city administrator for Shawano, which eventually ended up landing the deal with Belmark to be home to a brand new $12 million, 120,000-sq. ft. manufacturing facility. “We’re jumping through a lot of hoops and it was important that we have that comfort level with the people we were working with. It became a very intricate dance with a lot of participants. And of course it ended up being a very positive experience.”

“We’ve been doing this for a very long time, so we carry a very high level of credibility,” Mullis said. “That’s critical in a process like this.”

The trust becomes especially strong in light of the critical need for confidentiality throughout the process.

“Anonymity and confidentiality are paramount for a couple of reasons,” Mullis said. “The first is to avoid as long as possible the automatic reaction of the existing workforce, which will tend to be negative. They will assume that something bad is going to happen. And the second reason is just the competitive nature of the industry – no one wants his competitors to know what you’re doing.”

Feeding the information machine

Mullis, who has been at this site selection game for three decades, said communities in many states have become more proficient at responding to inquiries like his. Regional economic development organizations like New North are becoming more common, though some areas of the country still lag behind. The advantage goes to regions and communities with focused economic development teams capable of reacting quickly to requests for proposals.

“I would say the level of cooperation was very phenomenal in this instance,” Mullis said. “The requests for information are very detailed. My checklist probably has six or seven pages of detail that we require, so it takes a very effective administrative group to be able to pull those resources together.”

Murphy believes the history New North and its member communities have experienced together helped make the process more efficient than it might have been a few years ago.

“Speed wins in this game,” Murphy said. “When we sent out the original request, we had all responses back within three days. It’s a very iterative process, with ever more refined and specific requests for information. Sometimes it’s hard to know where you stand in the process, but as long as you’re being asked to respond, you’re still in the game.”

Dennis Heling, chief economic development officer for Shawano County Economic Progress Inc., was also impressed with how quickly the project moved forward.

“The two things that really stood out for me were how open the lines of communication were throughout the process and the sense of urgency that everyone involved brought to the table,” Heling said. “This was one of the more nuanced projects I’ve been involved with in the past 30 years, peeling back the layers of the onion, so it required everyone to react quickly at times.”

Tricia Braun, chief operating officer for Wisconsin Economic Development Corp. – which helped coordinate the state tax credits that sweetened the deal – said the site selection process is always fraught with challenges, but “this project worked better than most and really could be construed as best practice for how to respond.”

The deciding factors

So what brought Belmark’s decision down to Shawano? A lot of factors, some of which might remain cloaked in mystery.

“That’s the art of the deal – the end game,” Murphy said. “At the end of any project you don’t ever have 100 percent complete information about the final decision. It could be something you’re never going to know.”

“The thing is, this is not just a real estate transaction,” Mullis said. “We’re looking at communities and people.”

Tax and other financial incentives certainly play a role, “but those are really just the tie-breakers,” said Karl Schmidt, president and CEO of De Pere-based Belmark. “We looked at the job force and the community. We considered other states, but we saw the manufacturing job force as a real driver to stay in Wisconsin. And then we narrowed and refined it further. We wanted to be close to our existing facility so we had the ability to cross-pollinate with our De Pere workforce. And with Shawano we saw that they had a passion for the people side of things that was refreshing.”

Mullis said Belmark was satisfied that the workforce it needed would be available in the Shawano area, but he cautioned that northeast Wisconsin generally should be concerned about a potential workforce shortfall in the future.

“The lack of population and skilled workforce could be a limiting factor in the future,” Mullis said, “but we do see that there are efforts to create more sophisticated training programs to retrain existing workers and increase their skills levels. That’s very positive.”

Heling said the Shawano group worked closely with Northeast Wisconsin Technical College and the local school system to ensure the right training programs were in place, “so we can continue to build our labor pool.”

From a statewide perspective, Braun at WEDC said maintaining a strong workforce and supportive business environment was her organization’s top priority, “so we can make sure we are attracting continuing investment into our existing companies.”

Belmark expands in De Pere, too

Though not drawing as much public and media fanfare as the Shawano expansion, Belmark’s four-building main campus in De Pere’s East Industrial Park are also getting a facelift and a more than $10 million expansion.

Miron Construction is already working on a 38,000-sq. ft. addition to Plant 3 on Belmark’s campus that will include offices, conference rooms and a skywalk linking it to another of its production facilities. Plant 1 will undergo extensive renovations after the Plant 3 expansion is complete. Both projects are set for completion by February 2018.

While De Pere was not able to meet Belmark’s larger expansion needs, De Pere City Administrator Larry Delo was pleased Belmark kept its expansion nearby.

“We like to see any kind of expansion as close to the Green Bay area as possible,” Delo said. “Anything good for the region is good for De Pere.”